Minimum-Payment Trap Calculator
Example: Current balance: 5000 $ · Annual interest rate (APR): 22.99 % · Minimum payment (% of balance): 2 % · Minimum floor amount: 25 $
| Years to pay off | 100 |
| Total interest paid | $72,377 |
| Total paid (principal + interest) | $77,377 |
| Months to pay off | 1,200 |
Worked example
A $5,000 credit card balance at 22.99% APR with a 2% minimum payment (floor $25) takes roughly 17 years to clear and costs about $5,800 in interest — meaning you pay back nearly $10,800 on a $5,000 debt. Paying just $150 a month instead cuts payoff to 4 years and saves over $4,500 in interest. The minimum-payment trap is real: the lower the payment, the longer the lender profits.
Frequently asked questions
Why does paying the minimum take so long?
Minimum payments shrink as the balance shrinks, because most cards calculate the minimum as a percentage of the outstanding balance. As the balance falls, so does the payment — but so does the extra you are applying to principal. The result is a diminishing-payment curve that stretches payoff far into the future.
How do card issuers set the minimum payment?
The CFPB and card agreements typically require minimums high enough to cover fees and interest plus a small slice of principal — often 1–3% of the balance or a flat floor such as $25, whichever is higher. The exact formula varies by issuer and is printed in your credit agreement.
What is the fastest legal way to get out of the trap?
Pay as much above the minimum as your budget allows. Even an extra $25 a month shaves years off a high-rate card. Other levers: negotiate a lower APR, transfer to a 0% promotional balance, or pursue a debt-management plan through a nonprofit credit counseling agency.
Does carrying a balance help my credit score?
No. A persistent myth holds that carrying a balance improves scores — it does not. Paying in full every month (or as close as possible) keeps your utilization low, which is the second-largest factor in most credit scores. Carrying a balance only costs you interest with no scoring benefit.